The business behind the show

For Murdoch, media has often been about friends and influence

August 24, 2011 | 3:24
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In 1996, the teenage son of a prominent political figure in Washington, D.C., got suspended from his tony prep school.

Not wanting to see himself, his family or his boss embarrassed by his son’s actions, the father scrambled to keep the incident out of the news. One of the calls he made was to the chief executive of the parent company of a local television station that was planning on running a story. The owner of the TV station assured the politician that he'd have the story killed as a favor from one father to another.

Behind-the-scenes favors between the rich and powerful is nothing new. In this case though, the father in question was Vice President Al Gore, whose son Albert III had gotten suspended from St. Albans. The owner of the television station was media mogul Rupert Murdoch, chairman and chief executive of News Corp. Spokespeople for both News Corp. and Gore declined to comment on the story, which was confirmed by three former News Corp. executives with direct knowledge of the matter.

Although there is no evidence of any quid pro quos for Murdoch’s willingness to quash a negative story about Gore’s son, the personal favor for the vice president couldn’t hurt. News Corp., like most media companies, routinely has matters before the Federal Communications Commission and Gore was very close to the agency’s chairman at the time, Reed Hundt.

Whatever friendship Murdoch had with Gore then is probably gone now. Murdoch's Italian satellite broadcaster Sky Italia used to carry Current TV, the cable channel Gore co-founded, but dropped it this past spring, much to the chagrin of Gore, who told The Guardian, News Corp. has an "ideological agenda" and uses its power to "shut down voices that disagree with the agenda of Rupert Murdoch."

That may be, but BSkyB, the British satellite broadcaster that is 40% owned by News Corp. and whose chairman is Murdoch's son James, still carries Current.

Though Murdoch considers himself a political conservative, when it comes to his business dealings he is a pragmatist. He's willing to befriend a liberal democrat who can help his business agenda and he's not afraid to use his media properties as weapons to further his vast -– and politically connected –- empire.

The practices used by Murdoch and his companies are coming under closer scrutiny in the wake of the phone hacking scandal that led to News Corp. closing its British tabloid News of the World. Britain has been rocked by the revelation that News of the World had broken into the voice mails of celebrities, the royal family and crime victims.

The debacle has also called into question the cozy relationships the paper and its parent company have with politicians and law enforcement there. A former News of the World editor, Andy Coulson, who was arrested last month as part of the hacking investigation, had gone on to serve as a communications specialist for British Prime Minister David Cameron. Paul Stephenson, the head of Scotland Yard, also resigned as a result of the ethics scandal. Scotland Yard is also under fire for its role in the News of the World mess. It has been accused of not conducting a thorough investigation into the hacking allegations when they first surfaced to protect its relationship with News Corp. media outlets.

In the United States, Murdoch has not hesitated to use his media holdings to advance the company’s business agenda.

Case in point is the battle News Corp. waged against Nielsen, the company which provides television ratings used to sell advertising on cable and broadcast outlets, including those owned by Murdoch such as Fox News, FX, Fox, and local TV stations including KTTV in Los Angeles.

In 2004, Nielsen introduced new people meters to measure ratings for local television stations. Previously, participating households had logged by hand the programs they watched in diaries. The local people meters, as they were known, were seen as more reliable since the machine would automatically record what the TV was watching instead of relying on people to remember and write down the information.

As often is the case when a new measurement technology is introduced, ratings for the older broadcast networks and television stations declined while ratings for newer cable channels increased. Particularly hard hit were television stations owned by News Corp. Fearful that a decline in ratings at its local stations would mean a similar drop in ad revenue, the company started to fight with Nielsen over the accuracy of the new meters.

Around that time, stories started popping up in News Corp.’s New York Post about politicians and community leaders who were concerned that the new meters were short-changing shows favored by minority viewers. “Shame on you, Nielsen,” New York City Council member Hiram Monserrate of Queens was quoted saying in a March 30, 2004, article in the tabloid about the new measurement device that the Post dubbed a “gizmo.” Reverend Al Sharpton and even then New York Democratic Senator Hillary Clinton -– both of whom were often targets of the conservative New York Post editorial page –- also started protesting the new measurement system.

Nielsen argued that the meters did not show that minorities were watching less television, but instead were watching different shows -– programs that were not on stations owned by News Corp.

None of the 15 articles that the New York Post ran from February to July of 2004 that were critical of Nielsen, its new meters and the measuring of minorities mentioned that News Corp. had a lot at stake in the fight.

Also not disclosed was that News Corp. was helping to fund an activist group called Don’t Count Us Out that was created solely to fight Nielsen over the installation of the new meters and whose efforts were the subject of many of the stories.

The articles in the New York Post on the new meters typically appeared in the front of the paper for maximum visibility rather than in the business section.

That the New York Post, a paper that focuses heavily on scandals and gossip, took such an interest in a new television ratings tool was not lost on Nielsen. "Despicable" is the word used to describe News Corp.'s campaign to derail the meters by Susan Whiting, then the president and now vice chairman of Nielsen, in an article in the Wall Street Journal in September 2004. An earlier opinion piece in the paper said, “anytime you’ve got Hillary Clinton carrying water for Rupert Murdoch by moaning about disenfranchised minority TV viewers, there is no need for a laugh track.”

News Corp. now owns the Wall Street Journal.

The local TV stations owned by News Corp. also started covering the issue, including WNYW-TV in New York and WTTG-TV in Washington, D.C. When Congress held a hearing on the new meters in 2005 -– after heavy encouragement by the News Corp.-backed activists and politicians -– two camera crews were there. One was from C-Span and the other from WTTG.

While the campaign against Nielsen was ultimately unsuccessful, it did force the ratings company to delay the rollout of its new meters. And Murdoch did not forget who helped him out. In 2006, he held a big fund-raiser for her.

News Corp.'s access to political power players also came in handy when the company was launching Fox News in 1996. At the time, Fox News was having a hard time getting Time Warner to carry the channel on its cable systems in New York.

Being available in New York was crucial for the new channel, but Time Warner Cable, which also owned CNN, said it had limited channel space and was already making plans to carry MSNBC.

Murdoch and Fox News Chairman Roger Ailes enlisted a powerful ally in the fight: then-New York Mayor Rudy Giuliani, who had been endorsed by the New York Post and whose then-wife Donna Hanover worked as an on-air personality at WNYW, the Fox-owned New York TV station.

Giuliani's office hinted that Time Warner’s permit to operate cable systems in New York could be at stake and the mayor even tried to put Fox News on one of the public access channels that the city operated. Time Warner Cable went to court and successfully blocked the maneuver.

Dick Aurelio, now 84, was running Time Warner Cable’s New York operations at the time and vividly recalls facing off against Murdoch.

“I can’t ever remember a politician calling on behalf of a programmer -- it was kind of unprecedented,” Aurelio recalled. “It was clear payback for the support Murdoch gave them in supporting their campaigns.”

After Aurelio stepped down from running the cable system in the city, Time Warner President Dick Parsons, who was close to Giuliani, put Fox News on the Time Warner Cable system.

“That was a pure political act by Parsons to reconcile with Giuliani,” said, Aurelio, who was no stranger to hardball politics having been deputy mayor of New York during the John Lindsay administration in the 1960s and early '70s. Parsons declined to comment.

Giuliani is still quick to stand up for News Corp. Interviewed by CNN earlier this month, he was asked about the phone hacking scandal and what it said about Murdoch. The former mayor said the mogul is a " a very honorable, honest man,” adding, "this can't be something that he would have anything to do with."